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Books on Azerbaijan
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Update No: 315- (29/03/07)
The ever-present problem
There is a huge problem for Azerbaijan, its unresolved conflict with Armenia
over the Nagorno-Karabakh territory. One and a half million Azeris are refugees
as a result. Both nations are in thrall to this trauma. It will need
statesmanship of the highest order to resolve it.
Alas, there is small sign of this on either side as yet. Ilham Aliyev, president
of Azerbaijan, is a playboy turned politician, but no statesman he. Azerbaijan
is the most corrupt of countries and in this he is truly representative of his
domain.
His counterpart, Robert Kocharian, president of Armenia, is due to depart next
year. As a hardliner on the issue, a former president of the enclave no less,
this need not be regretted. But it is unlikely he will have a more enlightened
successor.
The status quo rather suits the hardliners on both sides. It is effectively a
stalemate, from which many benefit.
The oil curse compounds it
It is a curiosity that countries with the apparent advantage of oil wealth tend
to expend it in destructive ways, while allowing their traditional economy to be
hollowed out in the process. Azerbaijan is enormously endowed with oil, some 31
billion barrels at a conservative estimate. Aliyev intends to use the proceeds
to build up a colossal army and rewrite the war.
Armenia lacks energy resources; but it has a crucial ally that does not -
Russia. The Russian military are gung-ho about using the Armenians to intervene
in the Caucasus. The tedious truth is that everybody seems obsessed about oil -
the exploitation of which is deadly to the human race, so the scientists assure
us. But they are also obsessed about power, from which all else flows.
Azerbaijan pursues NATO integration
It is hardly surprising that Azerbaijan is pressing ahead with plans to overhaul
the country's armed forces in order to bring them up to North Atlantic Treaty
Organization (NATO) standards. It has a strong moral and legal case over the
dispute with Armenia - and it is becoming a most important conduit for Central
Asian energy exports, as well as a provider of the same in its own right. Baku
is back to being a vital hub of the world energy industry, as it was before
1914.
The pace of reforms will be gradual, according to senior government officials.
The deputy speaker of the Azerbaijani parliament, Ziafarat Asgarov, indicated
that the legislature would adopt a new strategic doctrine by mid-2007, the Ayna
newspaper has reported. A draft of the doctrine is on the agenda for
parliament's spring session.
In the meantime, bucking a trend of disengagement, Baku has agreed to increase
the number of Azerbaijani troops serving with NATO in Afghanistan, according to
Robert Simmons, the special representative of the NATO Secretary General for the
South Caucasus and Central Asia. As of 2005, Azerbaijan had 22 troops in
Afghanistan, according to the NATO figures.
Azerbaijani President Ilham Aliyev has named NATO integration as a top foreign
policy priority for Azerbaijan. The country's participation in the alliance's
Individual Partnership Action Plan (IPAP), a set of requirements that must be
met by alliance candidate-members, is scheduled to end in 2007. Azerbaijani
officials, who have already started work on plans for the next two-year slot of
Azerbaijan's IPAP, have indicated that they want to continue with the programme.
A second IPAP, running from 2007-2009, is expected to be signed with Azerbaijan
soon, said Simmons, who held 15th March consultations in Baku with Azerbaijani
Defence Minister Colonel General Safar Abiyev. Azerbaijan began its IPAP program
in 2005. An evaluation of the program's initial two years was made in February.
Simmons expressed satisfaction with Azerbaijan's military reform process.
"Azerbaijan is our reliable partner. The cooperation between Azerbaijan is
successfully developing," the APA news agency quoted Simmons as saying.
Turkey, a NATO member with strong cultural ties to Azerbaijan, is ready to act
as an expediter of Baku's reform process. A high-level military commission is
expected to be set up to coordinate bilateral military cooperation, the Anatolia
news agency reported 1 March. Particular emphasis will be put on training, an
area that General Ergin Saygun, deputy chief of the Turkish General Staff, has
described as the most important part of the cooperation between the two states.
Turkey also plans to help Azerbaijan establish an army company that meets NATO
standards, the general said during a trip to Azerbaijan in late February.
Several Turkish generals are planning to travel to Azerbaijan in late April on
an inspection tour, after which they will make initial recommendations on
Azerbaijani structural reforms, the News of Azerbaijan news agency quoted Selami
Chinbat, the Turkish embassy's military attaché in Baku, as saying.
An independent military expert, Ismet Abbasova, expressed hope that the Aliyev
administration's desire to develop closer ties with NATO could stimulate broad
reforms in Azerbaijan. "I hope there will be development in the education
system because the lack of skilled military staff indicates that the Azerbaijani
army is not up to modern standards," she said.
If all goes according to the Azerbaijani government's plan, the country's armed
forces would meet NATO standards by 2015. The changeover, however, will not come
easily, cautioned Zahid Oruj, a pro-administration MP who holds an influential
position on the legislature's Defence and Security Committee. "Taking into
account that military reforms are more complicated than economic and political
[reforms], and many officers have a Soviet education, it will take time,"
he noted.
The "frozen conflict" with Armenia over the disputed breakaway region
of Nagorno-Karabakh could also hamper plans to create a purely professional
army, commented Lieutenant General Vahid Aliyev, a military aide to President
Aliyev. "Since Azerbaijan is at war right now, it would not be right to
transform the entire army into a professional one," Lieutenant General
Aliyev told the APA news agency in late 2006.
Oruj said the government is currently "seriously" working on plans to
promote civilian leadership of the Defence Ministry. At the same time, he
downplayed media speculation that a civilian would be named as defense minister
anytime soon. "We did not undertake a commitment on this because the war
between Armenia and Azerbaijan has not ended yet," he said. A Defence
Ministry spokesperson said that he has no information about which ministry posts
might be assigned to civilians.
Despite probable delays in establishing a professional, civilian-administered
military, Oruj affirms that Baku's commitment to NATO stands firm. "We do
all this work because our national interests demand it, and it is our own choice
to transition to NATO standards."
Other top government officials are more cautious. During a February interview
with the German television channel Deutsche Welle, President Aliyev hinted that
Azerbaijani eventual membership in NATO should not be considered a foregone
conclusion. "What will be the result of this partnership, time alone will
show," the Azerbaijani president said.
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AVIATION
Azerbaijan Airlines signs order for Boeing 787s and 737s
Azerbaijan Airlines has signed an order for three Boeing 787-8 Dreamliners and
two Next-Generation 737-900ERs (Extended Range), New Europe reported.
Azerbaijan Airlines, based in Baku, is the first airline throughout the
republics of the former Soviet Union to order the 787 and the 737-900ER. The
order is valued at US$609 million at list prices. Jahangir Askerov, director
general of Azerbaijan Airlines said, "This order is a momentous step in our
history. With the twin-aisle 787, we will enter the long-haul market for the
first time. By expanding our fleet with long-haul twin-aisle airplanes, we will
offer our customers many more choices for far-away destinations. We are eager to
enter this new chapter in our proud history."
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CREDIT RATINGS
Fitch upgrades Azerbaijan to BB+
Fitch Ratings has upgraded the Republic of Azerbaijan's foreign and local
currency Issuer Default ratings (IDRs) to BB+ from BB, the ratings agency said
in a press release, New Europe reported.
The Outlooks remain Stable. The Country Ceiling has been revised to BB+ from BB
while the Short-term foreign currency rating is affirmed at B, the release read.
"Fitch's upgrade of Azerbaijan's sovereign ratings is driven by strong and
sustainable economic growth, low government and external debt ratios and a
growing current account surplus, underpinned by rapidly rising oil and gas
production," said David Heslam, a director in Fitch's Sovereign group in
London. The completion of key energy export projects in 2005 and 2006 has driven
a significant rise in hydrocarbons production, accelerating Azerbaijan's real
GDP growth, which reached an estimated 35 per cent in 2006. Rapidly growing oil
exports led to an end-year current account surplus of 14 per cent of GDP. At
just 11 per cent of GDP, Azerbaijan's government debt-to-GDP ratio is the lowest
of all BB range sovereigns and Fitch estimates that the public sector's net
external creditor position is equivalent to nine percent of GDP.
Azerbaijan's external debt stock is the second smallest in the BB range at just
20 per cent of GDP.
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ENERGY
SOCAR signs direct contract with Thailand
Azeri state oil company SOCAR signed a contract for direct supplies of
Azerbaijani oil to Thailand, a source in the company's marketing department
said, Interfax News Agency reported.
"The contract was signed with the Thai company PTT Public Company Limited
on February 28th 2007 for one year, and calls for the export to Thailand of up
to 1 million barrels of Azeri Light per month from the Ceyhan terminal on FOB
and CFR conditions.
This oil is to be supplied to the company's refineries in Thailand. This is the
first long-term agreement signed by SOCAR and an oil refining company," the
source said. PTT Public Company Limited is involved in production, refining and
transportation of oil and gas, and also in oil and oil product import-export
operations. The company has stakes in four refineries in Thailand. Azeri Light
is produced as part of the Azeri-Chirag-Gunashli project, in which SOCAR has a
10 per cent stake. Profitable oil is distributed between the shareholders in the
project in proportion to their participation in the contract.
Kazakstan assessing Trans-Caspian gas pipeline
The Kazak authorities are continuing to assess the feasibility of building a gas
pipeline under the Caspian Sea that will link Tengiz in Kazakstan, Turkmenbashi
in Turkmenistan, and Baku, Interfax News Agency reported.
Kazakstan's position is that the project cannot be put into effect without the
consent of all five Caspian littoral nations, Kazak Energy and Mineral Resources
Minister, Baktykozha Izmukhambetov, told Interfax in Astana on February 28th.
"During numerous meetings with US Secretary of Energy, Samuel Bodman, and
European Commissioner for Energy, Andris Piebalgs, we repeatedly discussed the
economic advisability of building the Trans-Caspian gas pipeline. This issue
remains open because the Caspian littoral states have an agreement that any
construction project under the Caspian Sea must be agreed upon by Kazakstan,
Russia, Turkmenistan, Azerbaijan and Iran," he said.
"It is necessary to calculate the financial viability of the project. So
far, Kazakstan is studying this project. It is seeking to learn more about
it," Izmukhambetov said.
The minister said in an earlier statement that Russia could use the
Trans-Caspian gas pipeline to ship gas from the Tsentralnoye and Khvalynskoye
deposits at its northern Caspian offshore sector that would be developed by
Russia and Kazakstan under a 50-50 agreement.
Kazakstan is planning to forward its suggestions on the gas pipeline and ways to
fund the project's feasibility study to the European Commission.
The Trans-Caspian gas pipeline is expected to be integrated with the
Baku-Tbilisi-Erzurum pipeline at a later date. Europe recognises the relevancy
of the problem of Turkmen and Kazak gas imports. Several European countries have
agreed to implement the Nabucco project, which is aimed at ensuring energy
supplies from Central Asia to Austria via Turkey. The Baku-Tbilisi-Erzurum
pipeline is considered a part of the project.
Central Asia currently operates a gas pipeline that transits Turkmenistan,
Uzbekistan and Kazakstan and is used to ship gas to Ukraine and Russia.
Meanwhile, Baku and Azerbaijan are discussing several options to ship Kazak gas
via Azerbaijan, including using the Baku-Tbilisi-Erzurum pipeline, Azerbaijani
Foreign Minister, Elmar Mamedyarov, said.
"There are several options to ship this (Kazak) gas to international
markets. The issue is on the agenda, but it is too early to say which of them
will be chosen," the minister said after a meeting with Kazak President,
Nursultan Nazarbayev, on February 27th in Astana.
It is expected that the Baku-Tbilisi-Erzurum pipeline will go into operation
this year, the minister said, adding that the issue of shipments of Kazak gas
via the pipeline was discussed with the Kazak president. "Kazakstan is also
interested in the pipeline," Mamedyarov said. "Of course, experts
should carry out detailed work, because there are a lot of related issues,
including tariffs, customs duties, as well as the technical aspects in the
implementation of the project," he said.
Azerbaijan ratifies contract on Govsany-Zykh field
The Azerbaijani parliament on March 6th ratified an agreement between Azeri
state oil company SOCAR and Russia's RussNeft oil company on the exploration,
development and sharing of production at the Govsany-Zykh group of fields, an
Interfax News Agency correspondent reported from parliament.
"SOCAR will own a 25 per cent stake in the contract, while Russneft Aberson
Investment Limited will have a 75 per cent stake," Parliamentary Deputy
Speaker, Valekh Aleskerov, said. The project's contractors should submit a
program for exploring these fields to SOCAR, which should then approve the
program in 60 days, he said. After the contract takes effect, RussNeft should
pay Azerbaijan a bonus of US$ two million. "In addition, the Russian
company should pay a bonus of an additional US$ two million after production
increases by 1.5 times compared to 2005," Aleskerov said. RussNeft has all
the financial and technological capabilities for increasing production at the
Govsany-Zykh field, he said.
SOCAR hopes Kazakstan will join Baku-Ceyhan in 2007
Azeri state oil company President, Rovnag Abdullaev, reckons that Kazakstan will
finally join the Baku-Tbilisi-Ceyhan (BTC) project in 2007. "I cannot say
exactly when the agreement will be signed, but it will definitely be this
year," Abdullaev said in an interview with the Kazak newspaper Express-K
published on March 7th, Interfax News Agency reported.
He explained that after the Kazak and Azeri presidents signed an agreement on
the formation of conditions to transport oil from Kazakstan to international
markets through the Caspian and the Baku-Tbilisi-Ceyhan system, through the
territory of Azerbaijan, in summer 2006, the next step should be the signing of
a transport agreement between Azerbaijan and oil companies that will supply
Kazak oil from Kashagan and Tengiz for the Baku-Tbilisi-Ceyhan pipeline.
"At the moment the sides are actively working on preparing this document.
And only after it is signed will be we able to say that Kazakstan has finally
joined this project," he said.
"Calculations are currently being made: who will supply how much Kazak oil
for the BTC and when. This is quite painstaking work, in which many companies
are involved," he said.
At the same time he said that the sides have yet to consider to question of
postponing the shipping of the first oil from the Kashagan field, development of
which will not begin before 2010. In parallel Azerbaijan is calculating the time
of decline in production volumes at Azeri-Chirag-Gunashli and is considering
various options to resolve this problem.
"At the moment SOCAR is working on projects for new investment in
Azeri-Chirag-Gunashli to extend the peak of production at the fields to 2020.
So, at the moment nobody is late and the postponement of the development of
Kashagan will have little influence on the utilization of the
Baku-Tbilisi-Ceyhan pipeline, at least until 2020," Abdullaev said.
He also said that in 2008 the BTC would be fully loaded with Azeri oil, and by
2009 oil production at the Azeri-Chirag-Gunashli field is expected to reach 65
million tonnes per year, while the design capacity of the pipeline is 50 million
tonnes. "Therefore I would like to stress that for the BTC Kazak oil is
additional volume, as it was built only for oil from Azeri-Chirag-Gunashli,"
he said.
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FOREIGN COOPERATION
Documents signed between Baku, Chisinau
Prime Minister of Moldova Vasile Tarlev paid an official visit to Azerbaijan
on February 23rd. Moldovan ambassador to Azerbaijan, Ion Robu, said the premier
was accompanied by the members of the Azerbaijan-Moldova intergovernmental
economic commission composed of ministers and deputy ministers and some other
officials, Interfax News Agency reported.
The co-chair of the commission, Moldovan Trade and Economy Minister, Igor Dodon,
noted that this is the first official visit of Moldovan government to
Azerbaijan. He said Moldova is interested to expand relations with Azerbaijan.
He noted that Azerbaijan is interested in import and export of products from
Moldova and is willing for constructive dialogue with Azerbaijani government.
According to the minister, Azerbaijan can cooperate with Moldova in the sphere
of agriculture, industry and technology. Stressing that Moldova is an oil and
gas poor country, Dodon said his country imports approximately 70 per cent of
energy from foreign countries. He offered Azerbaijan the opportunity to
important tractors from Moldova. Azerbaijani co-chair of the commission, first
Deputy Premier, Yagub Mammadov, said that cooperation between Azerbaijan and
Moldova was discussed in the business forum of Azerbaijani and Moldovan
businessmen. At the end of the meeting six documents were signed between
Azerbaijan and Moldova. These are intergovernmental agreements on geodesy,
cartography, cadastre, geo-information and distance study of land; Migration and
Protection of environment; and three cooperation agreements signed between
statistics institutions, health and finance ministries of both countries.
Azerbaijani and Moldovan Premier participated in the signing ceremony. It was
noted that the second meeting of Azerbaijan - Moldova intergovernmental economic
commission was held in the Cabinet of Ministers.
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FOREIGN ECONOMIC COOPERATION
Baku and Dushanbe to Create Economic Cooperation Commission
Azerbaijan President, Ilham Aliyev, and Tajikistan Prime Minister, Akil Akilov,
signed an agreement to expand their cooperation in the oil and gas sphere as
well as in the mining industry with regards to the electricity. The meeting of
the Azeri president and the Tajik premier took place during Aliyev's official
visit to Tajikistan. Aliyev invited Akilov to collaborate in realizing projects
such as constructing roads and bridges and the infrastructure and agriculture.
It was decided to establish an Inter-Governmental Commission for Economic
Co-operation and a working group to define the future positive co-operation
areas, Interfax News Agency reported.
Aliyev had a meeting with Speaker of the Upper house of the Parliament,
Mahmadsaid Ubaydullayev. It comes as the first official visit of the Azerbaijani
President to Tajikistan during the independence. Eleven interstate and
intergovernmental agreements, covering cooperation between Tajikistan and
Azerbaijan in different spheres has been in Dushanbe, during Aliyev's official
visit to this country, Interfax News Agency reported.
All documents were signed in a large meeting with the participation of the two
delegations, which began immediately after the meeting between the Presidents of
Tajikistan and Azerbaijan, Emomali Rahmonov and Aliyev. These are Agreements on
Friendship and Cooperation, an Agreement on Non-Visa visits of the two
countries, on mutual investments, on Trade and Economic Cooperation, on
Cooperation in the sphere of culture and arts, in the sphere of tourism, on
cooperation and mutual assistance in the custom field, on cooperation in the
sphere of standardization, meteorology and accrediting. The two sides also inked
an Agreement on Cooperation in the international automobile transport, in the
sphere of railway transport and on air transportation.
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TELECOMMUNICATIONS
Azercell plans to boost subscriber base 7.3%
Azerbaijani cellular operator Azercell is planning to increase its subscriber
base 7.3 per cent to 2.5 million in 2007, Khalim Atesh, the company's general
director, said at a press conference on March 6th, Interfax News Agency
reported.
"Azercell currently controls 76 per cent of the Azerbaijani cellular market
and it covers 77 per cent of the country," Atesh said. "The number of
subscribers increased 40 per cent to 2.33 million in 2006. According to our
forecasts, this figure should exceed 2.5 million in 2007 thanks to plans to
expand the range of services and the company's price policy," he said.
"Azercell investment in developing Azerbaijan's telecommunications sector
was 120 million manat in 2006 and it is planning the same amount for 2007. The
company's investment reached 460 million manat in the first 10 years," he
said. The appearance of new cellular operator Azerfon will help expand the
cellular market in Azerbaijan, Atesh said.
"Competition won't influence our strategy and we will do what we think is
right, as we did earlier," he said. Azercell was established in 1996.
Fintur Holding owns 64.3 per cent and Azerbaijan's Communications and
Informational Technology Ministry has 35.7 per cent. Bakcell also provides
cellular services in Azerbaijan. Azerfon, the third GSM operator in Azerbaijan,
will start offering services in March.
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TRANSPORT
Azerbaijan, Daewoo ink bus import agreement
Baku-based Transgate Ltd intends to buy 1,000 Daewoo buses and this deal is the
first phase, Azeri Press Agency reported on February 22.
Azeri Transport Minister, Musa Panahov, said the move came after a presidential
decree on improvement of the transportation system in Baku. "As per the
US$11 million agreement, 200 buses will be sent in the first phase, of which 50
will be delivered in May," he said. South Korean ambassador to Azerbaijan,
Lyu Kvang Chol, said the cooperation between the two countries not only in
energy but also in transportation, construction and other fields is developing
vertically.
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